I lost a lot of money in 2021.
At the time, NFTs were HOT. Oh man, were people making money flipping NFTs.
NFTs were the future!
I was convinced. A lot of us were. Maybe you were too.
I was so deep in the Twitter threads and hanging out in Discord servers with the most juvenile names imaginable, all to get an edge.
I wanted alpha.
But I never really got that alpha. I never had the best information at the best time—I had secondhand information that people wanted me to have because the people with the best information needed punks like me to be a step behind.*
*Highly recommend reading Crypto Confidential if you dabbled during this time.
I'm in the future now, and I didn't make any money on NFTs. I never use NFTs. I made bad buys, held for too long, and ultimately never calculated how much money I lost trying to mint a rare .jpg from a batch of 10,000.
This was an expensive lesson in first-mover advantage and arbitrage. Not only was it financially expensive, but it was all-consuming in terms of my time and attention, too.
Lessons in arbitrage
Arbitrage means YOU know something before most of the world (market) does. As a reward, you can use that information to make money with little effort. Arbitrage opportunities are real opportunities, and they can be lucrative.
Here's an example: If you can buy Gold for $100 and then sell it for $120, you've effectively created a machine to print $20. Early Amazon sellers were identifying arbitrage opportunities for products they bought wholesale on Alibaba, branded, and sold in the U.S. Minting NFTs was an arbitrage opportunity. I used to buy presale concert tickets to resell them on Stubhub—that's all arbitrage.
The problem with arbitrage is that it's a fleeting window that eventually closes when the market catches up or when too many people enter the game. And when they close, someone is often left holding the bag. In my ticket reselling days, I once bought dozens of tickets to a Jay-Z and Beyoncé concert series. They were GREAT seats, and I thought I'd make a killing. Unfortunately, the series wasn't nearly as popular as I expected, and I couldn't even resell them at the price I paid.
Here's what I've learned about being a first-mover: You have to be fast, intense, and maybe even a little cutthroat. If not, someone else who IS will beat you.
AI-rbitrage
If you're feeling a pull that you should be "doing more with AI," you're not alone. I see the same hunger in every creator group I'm in.
There's no doubt—AI is changing the way we're doing things. The way we learn, the way we make, even the way we communicate. But I can't help but notice that the AI environment feels like the NFT environment did. There are very real opportunities. People are definitely capitalizing and making money doing so.
I see creators use this in a bunch of different ways:
- Using prompts to generate a ton of content output. They can schedule this in bulk; they're publishing a ton every day and spending little time on content creation.
- Literally creating AI audio and video clones so that they're no longer recording! Their digital double performs for them.
- Shifting their entire strategy to talk about AI
- Creating software tools using coding software like Claude Code. It's never been easier to build a SaaS.
I'm smart and paying close attention—I feel the pull to try these things. But, ultimately, I can't shake the feeling that many of these are arbitrage opportunities. When the volume of content in feeds increases, it's harder to break through. So what do you do? Improve your prompts? Try to produce even more so you win through big numbers? Or revert back to a more handcrafted, human, less-is-more approach?
Does that make me enjoy the work more? Does it make me more useful?
Software feels particularly tempting. In Nathan Barry's classic essay, "The Ladders of Wealth Creation," he places software near the top of the ladder.
But...the easier software becomes...the more competition will enter the market. If you build a successful piece of software at [$49/mo], someone else can easily clone it and charge [$39/mo]. To win, you need to continually make the software increasingly valuable and difficult to switch from. That means quickly moving from vibe-coder to software CEO.
Otherwise, it's a race to the bottom.
Should you ignore these new opportunities?
I don't want to talk you out of anything you're excited about. But I do want to talk you out of acting from a place of FOMO.
You don't win arbitrage games with FOMO. You win arbitrage games with obsession and intensity. If you have an obsession or intensity toward something, follow it! That's an incredible compass. In fact, that level of conviction is the juice you need to succeed over the long-term.
But the worst thing you can do is let FOMO pull you away from something you have a genuine interest in.
Here's what I know about you: You didn't start creating to be told what you should be doing. You started because you had something to say. That voice—your actual voice—is still your best competitive advantage. The shortcuts will come and go, but the trust and relationships you build can be enduring.
As long as you're showing up and helping your audience move closer to their goals, you're on the right track. If you can leverage new capabilities to help them get there faster and more easily, amazing.
But you don't need to play arbitrage games just because you see them.
